I'm the Director of Sportsimpacts and an Economics Professor at the George Herbert Walker School of Business at Webster University in St Louis, MO.
I've conducted research at Super Bowls, Final Fours, All-Star Games, Ryder Cups, and numerous Division I NCAA Championship events.
www.sportsimpacts.net
www.webster.edu/business/depts/

Late Tuesday night it was announced that a deal had been struck between the Dodgers and Magic Johnson’s bidding group for $2 billion.

The sale officially is to Guggenheim Baseball Management LLC, which includes Mark R. Walter as its controlling partner, Johnson, Peter Guber, Stan Kasten, Bobby Patton and Todd Boehly. Current owner Frank McCourt and certain affiliates of the purchasers will also be forming a joint venture, which will acquire the Chavez Ravine property and parking lots for an additional $150 million.

Upon initially hearing this news, I thought of 5 groups/entities that should be rejoicing with this news:1) Sports fans of L.A.

Five times before, L.A. locals cheered Magic’s heroics after Laker championships for which he was the undisputed ring leader.

After the recent mismanagement by departing owner Frank McCourt, fans might be celebrating 5 times harder than after any of those championships as the new ownership consortium has the desirable combination of deep pockets, local roots, baseball management acumen, and a champion’s will to return the Dodgers to past glories.

2) Major League Baseball

This announcement will infuse new hope and expectation among fans about the direction of the Dodgers franchise, and this will surely boost profits and raise attendances back towards recent trends. From 2005-2010, the Dodgers attendance did not drop below 78% of capacity for any given year. In 2011, it fell below 65%.

Point being, pro sports leagues benefit financially when their large market teams are successful financially. Magic’s group will restore the faith and believe in the Dodgers brand.

3) Ownership of all other 29 teams

At this record-breaking price tag, this will naturally skew future sales values of other franchises upwards…unless an exogenous shock such as another recession were to occur.

Given his financial distresses in part caused by divorce proceedings, the speculation was that Mr. McCourt would have to secure at least $1.1 billion to pay off his debts.

Mission accomplished, and then some…as he will still own a portion of the land around the stadium which could be lucrative long-term.

5) The media network that wins local broadcast rights to Dodgers baseball

With the expected stability and competitiveness we suspect will sprout from this consortium of owners, either Fox Sports or Time Warner Cable will benefit significantly from having the 2nd most storied brand in the L.A. sports marketplace among its inventory.

Recall that Bud Selig nixed a $3 billion, 20-year TV deal with Fox last summer in an effort to ultimately push Mr. McCourt out of ownership. Given the Angels’ $3 billion deal with Fox which arose in the aftermath of the Albert Pujols signing, you can expect that the Dodgers will command at least that much if not more.

Clearly a good thing for the Dodgers and for those small-market teams that will get a piece of that shared revenue.

But also a good deal for whatever media network wins the bid because they will own broadcast rights to a premium brand likely to be on a long-term path of ascension.

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Dr. Patrick Rishe is the Director of Sportsimpacts and Associate Professor of Economics at Webster University in St Louis, MO.

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